Levin Report

C.E.O.s Agree to Disagree on Giving Racists a Free Pass

Bill George, for whom, unlike some others, white supremacists are a line in the sand.

By Richard Lewis/WireImage.

Last week, in the wake of Donald Trump’s decision not to disavow white nationalists (and assorted Hitlerian fellow travelers), dozens of C.E.O.s who had signed on to the president’s two business councils resigned in protest, with many of them condemning the response from the White House. Not everyone thought that was the right decision though, and on CNBC Tuesday morning, former Office Depot C.E.O. Steve Odland explained why.

“C.E.O.s have many constituents: customers, employees, owners. And we as a country are split politically, and those constituents are split politically,” Odland said on Squawk Alley. “So, by supporting one aspect of politics you’re by definition going against some of your other constituents. You have to be very careful as a C.E.O.” His fellow guest on the panel, however, didn’t think the c-suite should be so magnanimous. Former Medtronic C.E.O. Bill George, who was also on the program, disagreed, arguing that groups like the K.K.K. and neo-Nazis should actually be everyone’s line in the sand. “No one should associate with the K.K.K., white supremacists, neo-Nazis,” George said. “These things are not a part of American society you want to ever encourage.”

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Tax cut-hungry G.O.P. stops pretending to care about deficits

Steven Mnuchin’s Hermès-obsessed wife, the physical manifestation of the case for higher taxes, isn’t the only thing standing in the way of Donald Trump’s plan to overhaul the tax code for the first time in 30 years. There is also the small matter of the math involved, which is daunting. Trillions in tax cuts, contra Stephen Moore, do not pay for themselves. In fact, they are almost certain to add a nice chunk of change to the national debt, an issue that, in another day and age, was ostensibly the reason we needed to gut the social safety net. Now, though, with a Republican in office and tax cuts so close corporations can practically taste the savings, Republicans may be willing to be slightly more flexible. What’s an extra 12-figures worth of debt between friends?

Bloomberg reports that “a growing number of key congressional Republicans are considering a controversial maneuver that would allow for about $450 billion of tax cuts without offsets,” according to congressional staffers familiar with the discussions. Under the proposed plan, things like expiring tax breaks would not have to be accounted for when gauging the impact of the legislation, which recent estimates suggest will cost $7.8 trillion over 10 years. This would give tax writers extra wiggle room, an approach that the House‘s chief tax writer, Kevin Brady, reportedly “signaled openness to” last month as it would “lead to deeper tax cuts.”

Those less enthused by the proposal are deficit hawks and Democrats, who remember a time when Republicans didn’t want to pay for things like the Children’s Health Insurance Program because they cost too much. In a letter to the Senate Budget Committee’s chairman sent earlier this month, the Committee for a Responsible Federal Budget, having caught wind of the idea, wrote, “We are troubled by reports that the Budget Committee is considering using a so-called ‘current policy’ baseline for tax reform legislation. This decision would represent a huge break in precedent, would weaken budget discipline to allow Congress to add over half a trillion dollars to the debt.”

Ray Dalio is afraid

Time was, billionaire hedge-fund manager Ray Dalio was thrilled about the prospect of Donald Trump moving into the White House. “Regarding igniting animal spirits, if this administration can spark a virtuous cycle in which people can make money, the move out of cash (that pays them virtually nothing) to risk-on investments could be huge,” the Bridgewater Associates founder wrote excitedly in December. “Regarding attracting capital, Trump’s policies can also have a big impact because businessmen and investors move very quickly away from inhospitable environments to hospitable environments.” Eight months later, though, Dalio is decidedly less enthused. In fact, he’s downright frightened about the direction things are headed, in the era of Donald Trump. How bad does Dalio think things will get? He’s not sure, but at best, he thinks we’ll see four years without any legislative accomplishments. At worst, we get World War III.

“I believe that a) most realities happen over and over again in slightly different forms, b) good principles are effective ways of dealing with one’s realities, and c) politics will probably play a greater role in affecting markets than we have experienced any time before in our lifetimes but in a manner that is broadly similar to 1937,” Dalio wrote Monday in a blog post published on LinkedIn. “I’m essentially an economic mechanic who focuses on how reality works by studying the cause:effect relations and how they played out in history to help me bet on what’s likely to occur. For reasons previously explained in ‘Populism . . .’ it seems to me that we are now economically and socially divided and burdened in ways that are broadly analogous to 1937. During such times conflicts (both internal and external) increase, populism emerges, democracies are threatened and wars can occur. I can’t say how bad this time around will get. I’m watching how conflict is being handled as a guide, and I’m not encouraged.” Then he casually tossed off the prediction that “conflicts have now intensified to the point that fighting to the death is probably more likely than reconciliation.”

Still, Dalio says, he sees “no important economic risks on the horizon” and is optimistically hoping “the principles that bind us together are stronger than the ones that divide us.” On the other hand, he’s “tacitly reducing” Bridgewater’s risk on the assumption things will “not [be] handled well.”

Wells Fargo C.E.O. tells employees to expect more not-great headlines

This September will mark the first anniversary of the revelation that Wells Fargo brokers created millions of unauthorized accounts in their customers’ names. To mark the occasion, the bank told its staff in a memo on Tuesday that in the coming months, they can expect the scandal to grow. That disclosure appeared in a quaint little Q&A section, in response to the question, “I saw that we believe the number of customers with potentially unauthorized accounts may increase significantly. Can you tell me more about why this number may grow?” To which C.E.O. Tim Sloan answered: “Initially, our analysis focused on accounts that were opened during the timeframe of May 2011 to mid-2015. Now we’re completing an expanded retail account analysis for 2009 through 2016, including additional analysis of the original review period. So as our timeframe almost doubles to an eight-year review period, we can expect our totals for accounts and dollars remediated to grow.” (As an internal report commissioned by the bank showed, the fake-account issue may have gone back as far as 2004.)